EU ends antitrust investigation into Apple Pay with binding commitments to make contactless payments available

The European Union has accepted Apple’s commitments on how Apple Pay will operate in a bid to end a long-running competition investigation. Margrethe Vestager, the commission’s executive vice-president who heads the EU’s competition division, announced the development at a news conference on Thursday.

Apple has until July 25 to make changes that will allow developers of competing mobile wallets to offer contactless payments using the dominant EU technology (NFC) – allowing them to offer their users a “tap-and-go” payment experience, she said. They will also be able to access key iOS features, such as double-tap to launch apps, as well as Face ID, Touch ID and passcodes for authentication.

Apple will allow users to set a third-party wallet app as the default instead of its own Apple Wallet.

The bloc’s competition division opened a formal investigation into Apple Pay, Apple’s mobile payment technology and mobile wallet, in June 2020 after receiving a series of complaints. The investigation initially covered Apple Pay as a whole. It was later narrowed to focus on Apple’s use of the technology for contactless payments.

Two years later, in May 2022, the European Commission presented preliminary findings. It found that Apple had abused its dominant position by blocking competitors from offering NFC-enabled contactless payments on the iPhone. This meant that the company was unable to develop competing mobile wallets and compete fairly with Apple Pay.

The EU had a specific problem with Apple, which restricted rivals from creating wallet apps that could wirelessly communicate with NFC payment terminals, like Apple Pay. It suspected that the restriction would allow Apple’s contactless payment technology to unfairly gain market share. And the EU said it wanted Apple to provide full access to NFC to allow rivals to develop alternative wallets.

Apple was invited to respond to the EU’s May 2022 statement of opposition. The next major development came in January 2024, when the company proposed changes to resolve the case. Its proposal was for third parties developing mobile wallets and payment services to have fuller access to NFC functionality on iOS devices, free of charge, via a set of APIs without having to use Apple’s payment technology or wallet.

The offer would still prevent rivals from accessing a special chip in Apple devices, called a secure element, that it uses to enhance the security of Apple Pay transactions. However, Apple said it would provide “equivalent access” to NFC components through a mechanism called “Host Card Emulation (HCE) mode.” It said that would allow third-party wallets to store payment credentials and conduct transactions using NFC securely, without access to the secure element.

Other commitments Apple offered at the time included promises to provide third parties with additional features and functionality, such as default preferred payment apps and access to authentication features like Face ID, a biometric authentication technology. It also promised to apply FRAND (Fair, Reasonable, and Non-Discriminatory) terms when making decisions about granting access to NFC.

Stronger commitments

Vestager said on Thursday that the Commission accepted Apple’s offer after it insisted on certain improvements.

“By excluding competitors from the market, this could have a negative impact on innovation. This restriction on choice and innovation is harmful. It is harmful to consumers and it is illegal under EU competition rules. To address these concerns, Apple proposed a set of commitments earlier this year,” she said.

“We’ve been testing the package for the past month, getting feedback on whether the remedies might work, whether they might address our concerns. There’s been a lot of interest in the issue. Many banks, app developers, card issuers, financial associations have given us feedback. We looked at that feedback very carefully and asked Apple to refine their commitments. Then Apple proposed refined remedies, and here we are today, making those remedies binding on Apple.”

Details of Apple’s refinement of its January offer in response to industry comments are set out in the Commission’s press release – but include a commitment to:

• Removal a requirement for software developers to have a Payment Service Provider (PSP) license or a binding agreement with a PSP in order to access NFC input data;

• Improving the HCE architecture to align with evolving industry standards used by Apple Pay;

• And shortening the deadlines for resolving disputes, among other things.

Since the EU launched an antitrust investigation into Apple Pay, the bloc has passed an update to its competition rules that aims to make digital markets more competitive by applying upfront commitments to a number of major platforms, including Apple’s iOS, so that tech giants cannot block competitors from accessing the key infrastructure they operate. EU lawmakers want the Digital Markets Act (DMA) to speed up the process of restoring digital dominance and restoring competition to markets that have been hit by tipsters.

Shortly after the EU announced it was consulting with industry representatives on its Apple Pay offering, Apple suggested its proposed changes were also in line with DMA requirements.

Vestager said Apple’s commitments on Apple Pay, which the EU accepted, go beyond what is required by the DMA. “For example, they include mechanisms for monitoring and resolving disputes,” she noted, adding: “This shows that antitrust enforcement goes hand in hand with the DMA.”

“From now on, Apple can no longer use its control or the iPhone ecosystem to keep mobile wallets out of the market. Competing wallet developers and consumers alike will benefit from these changes, opening up innovation and choice while, of course, ensuring payment security.”

The commitments are binding on Apple for 10 years. Failure to meet them could result in severe penalties.

“Today’s decision makes the commitments offered by Apple legally binding. If Apple fails to honour these commitments, the Commission can impose a fine of up to 10% of its total annual turnover, without the need to find an infringement of EU antitrust rules, or a periodic penalty payment of 5% of its daily turnover for each day of non-compliance,” an EU spokesperson told us.

When asked for comment, an Apple spokesperson sent the following statement: “Apple provides developers in the European Economic Area the ability to enable NFC contactless payments and contactless transactions for car keys, closed-loop transportation, corporate IDs, home keys, hotel keys, merchant loyalty/rewards programs, and event tickets from within iOS apps using APIs based on host card emulation. Apple Pay and Apple Wallet will continue to be available in the EEA for users and developers and will continue to provide an easy, secure, and private way to pay, as well as a seamless presentation of passes with Apple Wallet.”

This report has been updated to include the Commission’s commentary.

Apple offers EU set of pledges aimed at settling Apple Pay antitrust probe